Brenda,
Here is an interesting article!!!
The new money machines
Automated loans are coming to your bank
He wanted a tractor. She wanted a horse.
For John Lestinsky, the prize was a rusty, 50-year-old Allis-Chalmers he could
burnish into a gleaming showpiece for the Indiana State Fair. For his wife, Kris,
it was a 15-year-old horse she could save from the slaughterhouse. To beat
other buyers, the La Porte, Ind., couple needed cash on the spot. So even
though their bank branch had closed, they headed over to a shiny kiosk at First
Citizens Bank of Michigan City, slid in their driver's licenses, touched a video
screen, reviewed credit reports and signed their names. Minutes later, he had a
check for $6,000, and she had a check for $2,000. Now, John can polish his
tractor, and Kris can groom her horse.
The Lestinskys took advantage of one of the hottest technological tools in
banking today: the automated loan machine, developed by Affinity Technology
Group of Columbia, S.C. Now operating in more than 60 bank branches,
supermarkets and shopping malls nationwide, Affinity ALMs allow creditworthy
consumers to obtain needed financial resources, often 24 hours a day, without
ever having to face a loan officer. For their part, banks benefit by reducing their
loan costs and gaining entree to a ready pool of new customers.
The combination is spelling success for Affinity, a year-old enterprise that raised
$65 million with an initial public offering in April. Jeff Norris, Affinity's
35-year-old chief executive officer, says he started the company when it took
too long for him to get a simple loan.
With financial institutions moving away from bricks and mortar, and toward
silicon chips and phone lines, the development of ALMs was inevitable. A
Deloitte & Touche study predicts that banks will close nearly half their branches
over the next decade; indeed, fewer than one third of all customers visit their
banks once a week or more. ALMs further enhance banks' efforts to turn
branches into revenue centers. The machine can process run-of-the-mill loans
while branch personnel are freed up to work on more complicated transactions.
ALMs are particularly appealing to consumers who have been rejected for a
loan or who find loan officers intimidating. Says Ronit Waser-Monzon of the
Educational Systems Employees Federal Credit Union: "There's not somebody
passing judgment on you."
Data. Using an ALM is easy. You enter numbers from identification cards, then
information like your Social Security number. The machine analyzes 260 pieces
of data and checks credit reports. You decide repayment terms, and if
approved, you sign an electronic pad.
To make a profit on ALMs, banks must generate enough volume to recoup
rental fees and the cost of machine servicing. ALMs seem to produce the
highest volume in middle-class areas, where the typical loan runs about $2,500.
Union Planters Bank of Memphis has an ALM in a tony shopping center, but
it's not doing as well as the ALM at the local Kmart, where big-ticket items
carry ads for the loans.
With the average credit card holder carrying a balance of some $4,000,
Americans need more easy credit like they need more fat in their diets. But
Norris notes that ALMs offer lower interest rates than credit cards--less than
10 percent versus more than 17 percent for a bank card. If you don't qualify for
a loan with a banker, he adds, you won't qualify with an ALM.
Still, ALMs have limitations. They can't make secured or joint loans, and most
banks set the debt ceiling at $10,000. What's more, the machines don't catch
aberrations that a loan officer might. Next fall, however, ALMs will be able to
process joint loans and car loans. But will the new technology reduce bad debt?
Only thousands more transactions will tell.
BY SUSAN HEADDEN
FYI
Raj |
